Lights, Camera, Automation: The New Class Struggle in Hollywood

Release of Gen-3 Alpha

On June 17, the New York-based startup Runway AI, Inc. launched “Gen-3 Alpha”, a text-to-video generator model made available to the public for only $12/month. This comes one year after Runway released its game changing Gen-1 and Gen-2 models in 2023. But within that window, many of its rivals including OpenAI, Kuaishou, Anthropic, and Luma have already released their own prototypes, raising the stakes in the ongoing multi-billion dollar, Generative AI (GenAI) gold rush. However, this time Runway’s Gen-3 Alpha looks like a formidable competitor to OpenAI’s SORA that has not yet been released to the public.

According to its website, Gen-3 Alpha presents a “new frontier” of fast, high fidelity video generation that is “for artists, by artists”. Upon its release, Gen-3 Alpha has attracted new investors and is in talks to raise $450 million in funding at a $4 Billion valuation. Its current investors include Google and Nvidia, both of whom have shares in multiple AI startups. And regardless of limitations or hitches in the software, each release by these startups is a strategic move to assert a leading position in the market and eventually claim the title of the best AI generator.

We can see this with the recent Lionsgate-Runway deal announced this September. Lionsgate, which made The Hunger Games, The Twilight Saga, John Wick, has become the first major Hollywood studio to lease its massive library of movies and TV shows in exchange for a custom-built GenAI model. It’s clear the capitalist class is taking this new technology seriously, racing to invest in what could make them enormous profit.

While this new technology is trailblazing, what does this current gold rush mean for workers?

The New Class Struggle

Last year’s historic double strike by the writers and actors won significant gains around the usage of Artificial Intelligence. It set Hollywood workers into motion around a new, explosive, existential battle in the overall class war to determine how, when, and what happens with new technology at their workplace. However, despite the WGA, SAG-AFTRA, and IATSE emerging victorious in the latest round of negotiations with the studios, the uncertainty around GenAI’s future impact on workers still remains.

Since the announcement of OpenAI’s SORA in February 2024, there has been a shake-up in Hollywood - that has many entertainment workers rethinking their careers and big-studio owners anxious about their business’ bottomline. In response to SORA, media mogul, Tyler Perry, put a halt on his $800 million studio expansion in Atlanta, saying “I just don’t see how we survive” without regulations. A study released in January 2024 by The Animation Guild (IATSE 839) predicted that about 21.4% of film, TV, and animation jobs (or approximately 118,500 jobs) will be disrupted or completely eliminated by GenAI in the US by 2026. OpenAI’s SORA cannot yet handle the shot continuity and control of traditional filmmaking, but that hasn’t stopped them from pitching their model to Hollywood studio executives this year. While the studios may not fully make use of this new technology, labor cannot afford to take a backseat or even defensive approach in between negotiations as GenAI continues to become more powerful and sophisticated.

Historical Shifts in Art

Throughout history, significant technological innovation has transformed the art world, just as GenAI is doing today. The advent of the camera, the transition from silent films to the talkies, the rise of digital art: each of these leaps in art production have raised similar debates around how art is made, what is art, and who makes it.

Today GenAI represents a seismic shift with the potential for widespread job loss among the Hollywood workforce. We’re living through a new industrial revolution - something the newest generation of workers has not previously experienced. There is much political confusion on whether or not these changes are good or bad. While some workers have embraced this technology as a tool and asserted their right for it to be regulated by workers, others have adopted denialism, refusing to use it. These workers are concerned about the potential job loss. But the school of thought is that machines cannot replace artists, because the algorithms lack the human emotional depth needed to produce good art. Certainly this is true: GenAI is not sentient. It cannot replace the “human touch”. But is that the real driver behind job displacement? Does GenAI want your job? Is new technology inherently bad?

Under capitalism, the primary concern around the production of art is profit. The boss doesn’t care about whether it's man or machine made. The acceleration of GenAI is driven by the need to churn out even greater profits. And while some may try to alleviate their fears of losing their career by opposing technological progress, history has shown us that those attempts invariably fail because they never tackle the root of the problem. If we understand that the bosses use technology to exploit labor and concentrate their wealth then we can imagine how if used in the interests of the working class as a whole, technology can instead improve our lives and working conditions. The new technological breakthroughs by Runway or OpenAI are not inherently bad. The real issue is that it is in the hands of the bosses.

CASE STUDY: The Streaming Wars

The rush to AI in Hollywood is just monopoly capitalism at work. On the record, media moguls like Jeffrey Katzenberg will say these historical shifts expand creativity and cut costs on production. Netflix CEO Ted Sarandos will say AI is going to be a great way for creators to tell better stories. But what they fail to mention is how this new technology in their hands is merely a means to an end in capitalism’s ongoing process of competition. In the pursuit of endless profit, these studios want to use AI to push out the competition and grab larger market shares, ultimately resulting in job displacement for thousands of workers.

We don’t have to look too far to know this is true - the introduction of digital technology, namely streaming, had a similar transformation on Hollywood. It began in 1997. Reed Hastings and Marc Randolph founded Netflix, a modest “Amazon.com of something” DVD rental service. Its early model was pay-per-rental where DVDs shipped directly to users’ homes, which was considered a novel concept at the time. Their model quickly shifted to subscription-based where subscribers paid a fixed fee for unlimited DVDs. It was the low-cost solution that finally eliminated the pesky late fees of traditional video rental stores like Blockbuster. This greater convenience to customers helped Netflix grow steadily, but it didn’t quite dominate the market.

In 2007, Netflix then launched their online streaming service. It was this pivot that revolutionized how the world consumes media today. The initial promise to subscribers was low-cost, easy-access to unlimited movies and TV shows via the internet - and without commercials. Initial reception to the launch was negative. In 2007, broadband could not handle high-resolution videos. The streaming quality was not up to par with BluRay discs. Nonetheless, the control subscribers had to decide how, when, and where they consumed media was very attractive. And thanks to internet deregulation over the years, capitalists were able to quickly take advantage of this new media to churn out profit in ways they could not with traditional cable TV.

The cat was out of the bag - streaming quickly gained momentum. That same year, Netflix’s earnings exceeded Wall Street expectations soaring past $1 billion. However, workers were not reaping the benefits of new media and ultimately this became a point of contention for the entertainment unions who now had to navigate disputes around digital distribution and the significant, new revenue generated for these companies.

This eventually fueled the historic 100-day Writers Guild of America (WGA) strike against the studios in 2008. At the strike announcement press conference, WGAW President Patric Verrone called out, “the companies are seeking to take advantage of new technology, to drastically reduce the residual income that sustains middle class writers and keeps them in this business. Their proposal would destroy the very pool of creative talent that is the basis of their immense revenues and profits.” At the time, the Alliance of Motion Picture and Television Producers (AMPTP) claimed that the streamers were experimental with “uncertain” economics, requiring “great flexibility” aka longstanding discounts from workers. In 2009 and 2015, IATSE agreed to give New Media productions worker subsidies until these streamers “became an economically viable medium”. However, the WGA did not fall for the AMPTP’s strategy - the workers maintained a united front in what eventually won them new jurisdiction over New Media writing and residual payments to members for use and reuse of their material via the Internet. This was the first battle in an ongoing revival of class struggle in Hollywood we’re seeing today.

In 2010, Blockbuster filed for bankruptcy and the Streaming Wars began. The term “Streaming Wars” was coined to describe the intense competition beginning in the mid-2010s between New Media streaming services such as Netflix, Amazon Prime, Hulu, Max, Disney+, Peacock, and many more. In order to outpace the competition - in 2013, Netflix began its strategic shift to producing original content with the launch of “House of Cards”, giving Netflix greater control over its own content and distribution outside of the “legacy” studios like Disney, Universal, etc. And not only was it producing original content within the United States but it expanded into international markets, operating in over 190 countries by 2017.

It is this rise in New Media that later unleashed further Hollywood labor struggles in 2021 and 2023. With streamers now producing movies and TV, there was a dramatic surge in demand for content to match the high levels of media consumption by subscribers aka the “Peak TV” era. To give you a better idea, in 2010 there were 210 scripted shows on air, in 2015 this exploded to 422 scripted shows, and in 2022 this peaked to over 600 scripted shows being made in a year. This meant worsening work conditions for lower wages. With streaming services, there’s no longer the traditional seasonal TV and movie production cycles. Studios are ordering content all-year with shorter seasons but the same high demand. For writers, this meant the introduction of mini-rooms, making creative professions more and more like gig work. For behind-the-scenes crew, this meant longer hours, missed meal breaks, and lower pay on New Media productions. Netflix's limitless growth was not a result of its innovation or business trends that only Media Moguls can ascertain - the reality is exploited workers made its rise possible.

And while the studios have a unified cartel against workers called the AMPTP - they are, at the end of the day, in fierce competition with each other, which means this process of competition never ends until there are winners and losers. Companies like Disney, Warner Bros have invested billions to chip away at Netflix’s lead in the Streaming Wars. With many new platforms for customers to choose from and splashy titles popping up on those services, there’s increased pressure for Netflix to retain subscribers and to sell the $16 billion in debt it acquired in the last decade. And with the emergence of GenAI, new technology can give them a substantial edge over their competitors - even if it's at the expense of worker’s livelihoods.

Despite Netflix’s early promises, the company had no motivation to make TVs and movies more accessible in the same way companies have no motivation to simply use AI for creative purposes. The streamers killed cable only to become what they sought to disrupt. They’ve now introduced expensive bundles similar to the TV cable model. They have no allegiance to everyday people’s wishes or dreams. In the short term, Netflix reduced prices in order to push out competitors and grab larger market shares and ultimately become the global entertainment powerhouse it is today.

Workers vs Hollywood Studios vs Big Tech

Over 170,000 Hollywood workers courageously went on strike in 2023, shifting the balance of power towards the workers and challenging the studios’ longtime hegemony over the industry. As a result, the WGA and SAG-AFTRA won significant GenAI guardrails that now serve as an important launching point for future contract fights. But for workers to gain more control over their working conditions and secure future victories, they must deepen their commitment to the broader class struggle. They must remain vigilant about changes in the balance of forces and the attempts to circumvent these hard-won gains. As evidenced in the case study, the studios need to maintain their competitive edge if they want to survive. The drive to consolidate capital never stops. As Big Tech moves further into media and GenAI, this coming era of wealth consolidation will undoubtedly be used to crush worker power.

Right now, OpenAI is aggressively pushing for more investment to secure its position at the top and could raise $6.5 billion at a valuation of $150 billion very soon. Likewise, Google, Facebook, and OpenAI recently offered tens of millions of dollars to partner with major studios in some capacity. Most studios have outright said no due to the legal tightrope they must walk. These companies have control over thousands of franchises that generate them enormous profit. IPs like Marvel, Star Wars, Harry Potter, etc. are their concentration of power. Concerns about copyright and Intellectual Property (IP) are significant - and there’s little consensus within the studios on how to make money from licensing their content out to AI companies without potentially losing control entirely. Studios are keenly aware they need to protect their creative assets, so they don’t end up like the music industry during the early days of Napster.

Lionsgate is the first to open Pandora's box by signing a deal with Runway. While it is a risk, this deal could become the new blueprint for the entertainment industry. Michael Burns, vice chairman of Lionsgate, said explicitly that the goal is to save “millions and millions of dollars” in labor costs by eventually replacing storyboard artists and visual effects artists.

Despite the risk, studios need to harness the power of GenAI to cut costs. In the fierce race to the top, they’ve spent too much on new content in order to accumulate as much capital as possible during the ten year Streaming Wars. This rush for content ultimately led to market saturation or an overproduction of shows that didn’t necessarily result in their desired outcome: subscriber retention or revenue growth. And as profit declined, these structural crises forced the studios to “fix” their mistakes, cut spending, and avoid a larger financial crisis. Wall Street investors also pressured studios to reign in content spending to match their profit expectations. Studio newspapers have declared that “Peak TV is over”, and now the future of Hollywood is uncertain. But for who? They’re already using artificial intelligence in production on a small scale, whether that’s marketing ads for new releases or de-aging Tom Hanks for a new role. However, the tools offered by Big Tech go a step further in a way that could transform the industry entirely all together - and disrupt the lives of the thousands of workers who built it.

What’s the Solution?

Recently, Sony Pictures CEO Tony Vinciquerra warned Hollywood is headed towards a period of “chaos” in the next two years. He described the consolidation of wealth that’s coming as a wave of “mergers and bankruptcies and sales and all kinds of fun things”.

We’re already seeing the results of the Paramount-Skydance megamerger - 2,000 workers (or 15% of the workforce) were laid off in August 2024 to save the company $500 million in annual costs. Meanwhile, the former CEO Paramount topped $31 million salary in 2023. This undoubtedly reflects the trend to reduce the competition by consolidating power and adapting for the rise of GenAI in Hollywood. But hundreds of thousands of workers will ultimately pay the price - leaving them to fight crushing unemployment, losing their healthcare, savings, and more.

Hollywood unions have united behind legislative protections around GenAI, and have won so far, but is that enough? Antitrust laws already exist but the Federal Trade Commission (FTC) has not been able to rein in these mergers nor the future feeding frenzy to come. It’s up to labor to put forth an independent people’s program around GenAI.

Labor must be on the offensive to secure future victories. We must demand that the US government seize the AI technology from its billionaire owners and turn it into public property. Workers are not clueless about AI, as the most recent NYTimes article suggests. As the strikes demonstrated, they know very well the threat it poses to their futures in the hands of lazy capitalists who run the show. The real blood, sweat, and tears behind movie magic has been commodified to serve monopoly capitalism. But workers will not be bamboozled to believe these marketing gimmicks around innovation and take this existential fight lying down. The GenAI models are already being trained off of stolen artwork, films, scripts and all kinds of creative labor in order to generate newer versions of themselves. Companies like Runway are currently being sued by visual artists for copyright infringement. Every penny of their profits are stolen from the labor of workers, not the executives and shareholders.

Sam Altman has never operated a camera, never rigged lights, never written a script. If OpenAI and other GenAI companies are taken over by the public, then the productive power of GenAI can be used to enhance the lives of workers and their craft in storytelling while ensuring that workers have power on the job.